Enhabit Home Health & Hospice Finally on the edge of fruit

The vision for Enhabit Home Health & Hospice – the soon-to-be self-employed company after a spin-off from Encompass Health Corporation (NYSE: EHC) – is clearer day by day.

For the past two weeks, Encompass Health has been reviewing the public’s thoughts on Enhabit, which has been around for a long time. In fact, Encompass Health locations have been moving to Enhabit locations since February.

The company first announced in December 2020 that it was exploring “strategic alternatives” to its home health and hospital business, including sales, spinoffs or mergers. A spinoff was determined to be the best option later in 2021, but not without going back.

First of all, the investment company Jana Partners, which owns more than 2% of the shares of Encompass Health, asked the company to review the options, specifically a merger. There were rumors that there may be other buyers willing to buy in the business segment, including Advent International, a private equity firm, and Aveanna Healthcare Holdings (Nasdaq: AVAH), a home care provider.

But in the end, the spin-off is moving at full speed, and the industry is once again gaining a foothold in the public health market. According to the record of the last 10 forms filed with the U.S. Securities and Exchange Commission, Enhabit expects to be fully segregated for the next month, except for the usual regulatory approvals and requirements.

On Monday, a series of slides by Enhabit were shown in an Encompass 8-K archive: a home health and hospital provider with 5 major market shares, including 252 home health locations in 34 states and 99 hospice locations in 22 states. .

Together, they account for more than $ 1.1 billion in annual revenue. In addition, the company will have more than 10,000 employees, including corporate office staff.

Source: Encompass Health

Barb Jacobsmeyer, CEO of Enhabit, told Home Health Care News in February that the biggest adaptation of his new role was to deal with a mobile worker, but he was also enthusiastic about the company’s staff situation.

“The learning curve has certainly been, for me, dealing with a mobile employee,” Jacobsmeyer said. “It’s very different than being able to walk around with all your employees in a few hours. But coming from the hospital helped me, I know what I always expected from home health care as a provider for my patients. And I know what our team should be proud of and what we do very well. ”

Jacobsmeyer was a leader in Encompass Health’s patient rehabilitation business. Crissy Carlisle has joined the management of Enhabit CFO, the former head of investor relations at Encompass Health.

“We’ve had a couple of successful quarters here,” Jacobsmeyer continued. “I’m excited to turn the page, stop talking about billing, and talk about retention. I think it’s there. And it’s not easy to make a sound. I don’t think it’s easy at all. Really, I think it’s very hard. But I think it’s doable. ‘

The slide show also included that 80% of the company’s home health care revenue was from Medicare.

Leaders at Encompass Health also addressed the conflict between Medicare service referral fees and Medicare Advantage (MA) referrals in a recent earnings call, especially in terms of improving service fees due to rate differences, especially to address staff shortages.

“” I think home health, in the past, [it] it’s been exploited for a while because it’s been a very fragmented industry, ”said Mark Tarr, CEO and president of Encompass Health, at the BofA Securities 2022 Healthcare Conference. if it weren’t for that, others would be willing to take the plunge. “

But on the slide show, Enhabit said he wanted to broaden his MA focus, considering market trends that would make MA Medicare beneficiaries the main type of insurance, probably by the end of the decade.

Source: Encompass Health

Expected growth

Two weeks ago, Encompass also entered into Enhabit credit agreements, including a $ 400 million term loan facility A and a $ 350 million revolving loan.

As she prepares on her own, Jacobsmeyer and Carlisle will be the sole decision-makers for the growth plans, and it all went through Encompass Health during this limbo period.

Source: Encompass Health

In 2022, Enhabit stated that it intends to spend on strategic purchases of between $ 50 million and $ 100 million, boosting organic growth. It also expects to open 10 new premises.

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